The Hawaiian gazette., 1887-11-15

/ The first Japanese loan brought out on the
London market was a per cent. one fol
G., 100000; the issue price was 921S per cent.
commission was ~ per cent, and expenses
per cent. The whole loan was not sub.
scribed for.
Chinese first loan of per cent. for 81. 505,
900 was issued at 98 per cent; commission,
IL per cent; expenses, 81 per cent, but Sc
cured by special hypothecation of their
customs revenues, and receiver appointed
by the bondholders, with a provision in the
Act that holders of the bonds might pay
them for customs duties. China afterwards
obtained a 6 per cent. loan at same rate of
! issue.
Argentine Republic. Province of Cardova,
has recently foated a per cent. loan in Lon
! don at the issue price of 81 per cent-the Act,
/ which is dated 18th June, this year, authorizes
a 6,000,0 900 dollar loan and the government
| has issued in London, under this authority,
! 595, 200 pounds sterling, stating IN the pros
! pectus that the issue is part of an authorized
/ loan for S6,000,0 00-the bonds are free of
! taxes, and the Act and issue are identical
/ with the Hawaiian one-the resources of the
country and its internal wealth however, are,
much larger than ours, and while our annual
debt per capita is about S150, theirs is but
/ S1.00.
These quotations will show that consider
ing the extent of territory, amount of popu-
lation. and situation of this Kingdom, the
Loan has been placed in the London market
under singularly favorable conditions
IF you compare the aggregate amount of
commissions, expenses, ETC., and net results
of those loans with those of the loan effected
for the Hawaiian Islands, this becomes self
evident, and in attaining this result, 1t be-
comes evident also that much more is due to
the friendly efforts of our coadjutor in Lon
don, than to the gain and compensation
which the negotiation held out to the per-
sons who undertook the work
1t may be asked: Were these expenses ne
cessary, and what benefit has the Hawaiian
Government obtained through this expendi-
ture for securing an official quotation on the
London Exchange for Hawaiian National
Bonds? Anticipating such questions, | re-
spectfully submit TO Your Excellency these
propositions.
A Loan cannot be foated in the London
market without being duly listed by the Stock
Exchange. Before that is donea committee
of so of its members, called the Stock Ex-
change Committee, composed of business
men and legal men of the highest standing
both as to intelligence and integrity, require
of the issuing house the production of COM
plete and verified list of the names and ad-
dresses of all the subscribers to the loan and
the amount allotted to each subscriber re-
respectively.
The Committee must ascertain if the sub
scriptions and allotments are made in good
been made to any member of the Syndicate
unless the subscriptions by the public have
fallen short of the amount of the loan called
for. Only upon such finding will official re-
cognition be given by the Exchange to the
bonds.
This is done to prevent stock-jobbery with
National securities and the consequent inn
pairing of the credit of the government
whose bonds are so placed. 1t is done like
wise to protect the public who invest in such
securities in good faith, upon the express
assurance of the Stock Exchange Committee,
that the representations made in placing
such stock before the people are justified and
that the quotations at which they are placed
are in good faith the representative value of
those securities, and that the business world
can with confidence expect the prompt pay
ment of the interest accruing on such secu-
rites Those bonds then acquire value
and commercial usefulness, because the Banks
and Commercial Houses then only recognize
their value.
In the course of time, if nothing uutoward
happens, and the payments of interest are
promptly made, the premium reaches a
point which represents unit of interest. |
and the bonds c5n be converted at par value, |
into others bearing less interest, until the |
Loan be placed at the same rate which |
other older and richer countries have OBJ
tanned through the good faith shown in the
dealings of their Governments with +he |
financial world of London. This course we |
followed, and despite the violent, unfair, and |
unlustifable attacks of certain portion of /
the American press, not only was the Loan |
placed and regularly listed, but through the |
effort and aid of the capitalists who were
friendly disposed to this Kingdom and its
the securities advanced ON their |
own merit, to premium of eight per centum
above their par value. At this figure it re-
under unimportant fluctuations,
and we had pefected the arrangements to
place the remaining quarter of the Loan
(G1CO,O00) at that figure (the benefit of which
advance would have accrued entirely to the
Hawaiian people, when news reached Lon
don, of the change of administration. So
much better informed are the commercial
public there upon Hawaiian affairs, than
would be supposed in the Islands, that the
normal change in the Government hardly
affected the value of the Hawaiian securi-
ties, but when the false news was dissemin-
ated there, that the new administration con-
templated reputation, the Hawaiian bonds
fell in value, from 10S to So.
AS is well known to your Excellency at
that time there were two local private enter
prlses mooted, which were supposed in Lon
don and acknowledged in Honolulu, to be of
great Importance, and carried in them the
promise of great benefit to our community,
VIZ. the projected railroad of the Hon. Saml.
3. Wilder and the colonization undertaking of
Il. T. Dillingham;, Esq.
The projects had no relation to or connec-
ion with one another, and were being taken
n hand by different moneyed circles in Lon
ion; yet the effect of those rumors of repu-
liation by the Hawaiian Government was
such, that both projects had to be ban
Toned, We hope, however, only temporarily.
I IS hardly necessary to poin, nnt to your
txcellency, how intimately lie possibility If
obtaining cheap capital for private and semi
private enterprises is interviewer with the
establishment and maintenance of sound
national credit, and this can be said with
greater force of the Hawaiian Islands than
If other countries, such as mining coun-
rles: in the latter the gaming spirit assists
here our undertakings obtain a recon-
nendable character, only through the show
ng Of stability, intelligence, economy and
honesty of the Government
Through the efforts of those to whom this
business was entrusted, the Hawaiian credit
vas firmly established in Londcn, and that
lnder conditions which were by no means
'nerous or exacting; so that private persons
n England, who are largely interested in
business in these Islands, were astonished as